...And So Could Rouse

John Rogers is the Clark Kent of money managers -- a mild mannered stock-picker with super-long-term performance. "I don't like to get involved in controversy says Rogers, who runs Ariel Capital Management in Chicago. Nevertheless, Rogers has been buying into the stock group Wall Street loves to hate -- commercial real estate. His vehicle of choice is Rouse, a developer of glitzy shopping malls.

The company operates six dozen malls, including South Street Seaport in Manhattan and Habprplace in Baltimore, often in conjunction with private investors. That makes it as much a bet on retailing as it is on real estate -- a wager investors are reluctant to take nowadays. As a result, Rouse's stock "has been selling cheaper, cheaper, and cheaper," says Rogers, "to the point where there's limited downside and tremendous upside potential."

Indeed, Rouse shares are trading at less than half the price they commanded in 1989. The company's stock nose-dived in 1990, when the recession began to hammer away at retail-intensive real estate developers. But Rogers insists that the company refrained from overbuilding during the overheated '80s, which has resulted in occupancy rate now in excess of 90%.

That's why Rogers thinks Rouse is poised for a return to profitability, which has eluded it for most of the past few years. All but one of the last eight quarters has shown a loss, but Rogers predicts that the company will get back in the black this year, and by mid-1993, he expects earnings for the preceding 12 months to weigh in at $1.10 a share. The clincher, as Rogers sees it, is the value of the company's assests -- $27 a share, by his reconing twice the share price of 13 3/4.

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